November 14, 2012
The Doctor is In
This week The Practitioner brings you an interview with an
MD, MBA turned Family Business Advisor – and his insights into how some core
elements in a medical education can provide models for advisors and consultants
as they think about their work with families in business.
Mark Heitner has degrees in medicine and business, completed
training as a psychiatrist, and has managed three software companies and two
hospitals. He writes about business succession planning, the unmet needs of
family business owners and heirs, and the fledgling attempts by financial
institutions and advisors to reach out to families.
The Practitioner: You’re in the unique position of having
both MD and MBA next to your name. How did that double degree come about?
Mark Heitner: I became the medical director of a hospital
immediately after completing psychiatry training at Cornell. I was in a critical discussion about the
future of the hospital when it was made clear to me that my opinions had been
discounted because I was a physician. So
I got a MBA at the University of New Mexico, where I was on the medical school
faculty. In the course of treating
families, I got to know their business issues and saw the overlap of family
issues with family business issues.
The Practitioner: How is this career trajectory useful as
you give advice to family business owners?
Mark Heitner: Psychiatry training involves three years of a
hands-on, closely supervised curriculum in family dynamics and family
psychotherapy. Psychiatrists run family meetings, also known as "family
psychotherapy”, from the first week of training. This training is extraordinarily helpful in
dealing with the dynamics of a family held business. Psychiatrists practically
invented the term "dysfunctional family”.
The value of an MBA lies in being able to speak the language
of business. Physician - MBAs may also
have had hands-on operational experience, such as running hospitals, research
facilities, charitable foundations or his or her own family business. Physician-MBAs may have fought with
competitors, managed managers, filed lawsuits, and made payroll.
The Practitioner: Can you speak a little bit about the
physician/family enterprise advisor connection?
Mark Heitner: The skill sets used by physicians transfer
directly into family business consulting.
Problem-focused rapid assessment of an urgent matter is a
cornerstone of medical training. It
involves establishing a rapport with the patient and acquiring vital
information from multiple sources.
Also, physicians are accustomed to making recommendations
under trying circumstances—often without nearly as much information as they’d
like. Further, physicians must have a comfort level with problems that are
evolving, in order to manage what may be multiple complex challenges. Is advising family businesses any different?
The unspoken dynamic of family business is the threat of
death or the consequences of illness of the wealth creator or heir. Families recognize that practicing physicians
address this issue throughout the day and will address this issue in a family
business head-on. As a result, the calls
to a physician-MBA consultant are not for family mission statements but for
emerging, urgent problems. For example,
the ability to routinely inquire about illness – cancer, alcoholism,
depression, and heart disease – means the physician can address the
implications of these issues in a family and the family firm.
And then there is the matter of caring. By and large,
physicians are thought of as caring people.
As one sage observed, "the secret of caring for the patient is caring
for the patient.”
The Practitioner: What advice would you give to other
advisors serving family business clients?
We live in a time of unparalleled wealth creation and the
transfer of unthinkable wealth to the next generation. Families are desperate for advice about their
children, their legacy, and how to pass the business, their wealth and their
values to the next generation. . Unfortunately,
a family’s usual advisors focus on narrow issues like gift taxes or asset
allocation, and not goals. These
advisors are silent on the issues of most concern to their clients, and
perhaps, rightly so. The either have no
expertise in family matters or are sidelined by the constraints by their profession.
Family firm advisors are needed now as never before.
My advice is to serve as a non-family board member of the
family firm. This brings in expertise
families may not have in house. In any business, it’s helpful to have outside
board members because these boards tend to be more active and more
constructive. But for family businesses in particular, the interplay at home
tends to affect the interplay at work and complicate things. An outside board member stands a better chance
of facilitating change.
The Practitioner: Why is it important for different advisors
to communicate with one another about their mutual clients?
Mark Heitner: It is
stunning that a family’s advisors have so little communication with each other,
and that they know so little about the family.
This costs them and their client dearly, as evidenced by the rise in
trust litigation. Investment advisors
may be the worst "offenders.” When a
wealth creator dies and passes his/her wealth onto the spouse, 50% of the surviving
spouse changes the advisor. Almost all
of the other heirs do when the spouse passes.
Perhaps family business advisors can coax other advisors out from their
silos, and create a team approach to a family.
That’s why I published articles this year in Trust & Estates and
Probate & Property, on the problems of heirs and in business succession
Stay tuned next week as Karen Vinton summarizes and gives the practitioner's perspective on some of the latest research in our "Rising Star Journal", Family Business Review
Yours in Practice,